These countries face two problems, which the crisis is making worse. First, government borrowing is out of control, increasing the risk of default. Greek government debt will soon pass 100 per cent of GDP while Italian debt is about 115 per cent.

Good gracious!

Second, Greece, Italy, Spain and Portugal have long-term economic weaknesses. Their overregulated economies discourage innovation and efficiency. Their universities are of poor quality and too little is spent on R&D. They are too dependent on low-tech industries that cannot compete with Asia; but powerful trade unions have pushed up wages. Since 1999 wages in manufacturing, adjusted for productivity growth, have risen by 36 per cent in Italy, 27 per cent in Spain and 14 per cent in Greece. Over the same period they fell by 12 per cent in Germany.

Good gracious.

If Greece’s leaders refuse to act, investors will eventually become very reluctant to lend it money. The option of defaulting, leaving the euro and devaluing a new drachma might appeal. It would make exports more competitive. But Greece – or any other eurozone country in trouble – is unlikely to pursue such a course, for two reasons.

First, few Greeks would want to leave the euro, and not only because it is a symbol of economic and political modernity. Even a discussion about leaving would cause huge dislocation. People would sell Greek assets, on the assumption that the new currency would sink, and stop lending to Greek companies. If the Government did decide to leave the euro, it would need perhaps a year to negotiate the divorce. And when the new currency lost value, Greek companies and citizens would strain to service their euro debts.

Second, Greece’s partners would rather bail it out than see it leave the euro. If Greece contemplated leaving, the financial markets would speculate against other potential quitters; Italy or Ireland, for example, could find that credit dried up.